Vatican City, a city-state surrounded by Rome, Italy, is the headquarters of the Roman Catholic Church. It's home to the Pope and a trove of iconic art and architecture. The Vatican City State is an ecclesiastical or sacerdotal-monarchical state (a type of theocracy) ruled by the pope who is the bishop of Rome and head of the Catholic Church. The highest state functionaries are all Catholic clergy of various national origins.

The Pope is ex officio head of state of Vatican City since the 1860s, functions dependent on his primordial function as Bishop of the diocese of Rome. The clergy (those who contribute to the operation of the Vatican City religiously) and the Swiss Guards who 'defend' the Vatican City are the only people allowed to reside inside the Vatican City other than the Pope.

More Info: en.wikipedia.org